What Does Dave Ramsey Think About Timeshares?

While I don’t always agree with the financial advice that Dave Ramsey gives to his listeners, we’re both on the same page when it comes to timeshares. Ramsey doesn’t have a high regard for them, and he believes that people should stay as far away as possible from them. He doesn’t mince his words when it comes to these vacation options and views them as an outright scam. In his own words, this is what he has to say about them: “Timeshares are one of the biggest scams on the market today. Once you are stuck in one, you are stuck in a black hole.”

Below are some of the reasons that he feels timeshares are one of the biggest scams in the vacation industry:

They’re Not Affordable

For the mass majority of people who are targeted by marketers to buy timeshares, they’re not consumers who can really afford one. There are quite a few expenses that come with owning a unit, and these expenses are perpetual. In fact, they can increase over time. Just because the sales person who’s trying to sell you a unit tells you that you can afford it, that doesn’t make it reality. They’re an expensive vacation option, and the truth is that most people’s finances are not in good enough shape to be able to afford one.

They Don’t Make Financial Sense

Even if you have your finances in order and can afford to buy one, Ramsey points out that it still doesn’t make financial sense to do so. The average cost the timeshare is about $15,000 these days. It makes much more sense for you to invest this money than buying a vacation resort unit. The calculations become even worse if you have to borrow money to buy the unit, because you’ll likely end up paying double-digit interest rates to do so. Ramsey points out that if you invest that $15,000 instead of buying a unit with it, it would be worth over $1 million in 40 years.

Terrible Investment

There are still far too many people who believe that purchasing a timeshare is a good investment. Ramsey wants to make it clear to everyone that a timeshare is not an investment. What you’re actually doing when you buy a unit is prepaying your future hotel expenses each year for the rest of your life. Even worse, you’ve prepaid this amount whether you end up using it or not. Combine all this with the fact that they’re a depreciating asset, which will lose its value year after year (much like a car does), and it means that if you do end up buying one, you’re going to end up losing a lot of money in the end.

Selling Them Is Difficult

Another important reason to avoid buying one of these units is due to how difficult they are to sell when you no longer want one. The law of supply and demand rears its ugly head for anyone who owns a timeshare. There are far more people who want to sell than those who are interested in buying. This can mean that in some instances, you won’t be able to sell even if you want to, forcing you to continue to pay yearly maintenance fees.

It can even be difficult to give yours back to the resort, which is what Ramsey suggests owners try to do. Even if you offer it to them at no cost, the resorts have little incentive to do so if they still have inventory, since keeping you as an owner will mean you have to continue to pay the yearly maintenance fee. The bottom line is, when you want to sell, you’re going to have a difficult time, and if you are ultimately successful in selling your unit, you’re going to lose a lot of money doing it. The Federal Trade Commission (FTC) notes that you also need to be careful of the many reseller scams that are out there.

In the end, don’t fall for the marketing tactics which resorts will use to try to convince you that buying a timeshare is a good deal. Take the financial advice of Dave Ramsey, and remember that it’s one of the biggest travel scams out there. Below you’ll find a video with some more of Dave Ramsey’s thoughts about timeshares:

13 Responses to What Does Dave Ramsey Think About Timeshares?

I bought a timeshare in my early 20s and it was one of the worst financial mistakes I ever made. I never intended to buy it, but I cannot suckered into going to a presentation to get free show tickets when I was in Las Vegas. The high-pressure sales person convinced me to sign on the dotted line, and I ended up with a timeshare. It was one of the hardest things to get rid of, and I lost about $20,000 in the process. It was an expensive lesson learned.

I get what Dave is saying but he completely misses the resale market, where you can buy a timeshare for a lot less than what the resort sells them for. You can get them at great resorts like Marriott for a couple of thousand dollars and even with an average maintenance fee of about $800 a year it’s still a great value vacation over time compared to a hotel room. Try getting a decent room at a resort for under $200 a night. It’s never supposed to be a financial investment but an annual vacation cost – and everyone should take at least one vacation a year.

I have to agree with Dave Ramsey on this one. I know a few people that feel that it was a worthwhile expense, but for most people it’s a financial mistake. The industry seems to be built on targeting the people that can least afford it.

I would argue that even buying on the secondary market isn’t a good deal for most. You really need to be an organized person to take advantage, and know a bit about how time shares work to take full advantage. The problem is that if you miss one year for any reason, you lose everything you paid that year.

I’m not saying that some people can’t do it, but I think it’s like credit cards. Most people will lose with a time share even if they buy on the resale market so it’s better to stay away.

I would disagree. The vast majority of owners who complain do so because they were told lies at the sales presentation that they later found out to not be true, or half truths. Also, I know many people who like their timeshare until they want to get out and then can’t. The problem isn’t the owners. It’s the way they are sold and marketed.

I don’t agree with everything that Dave Ramsey says, but this is one area where I do. I don’t know anyone who can really benefit from one of these. I would stay as far away from these as I possibly could.

Legitimate timeshare sales will not claim one-day sales or unrealistic gift offers. If the timeshare is not a scam, their offers will be the same regardless of whether you purchase today, tomorrow, or one month from now. As a timeshare purchaser, it is important that you take the time to do the research about the property in which you are interested in purchasing a timeshare. Make sure that you search for client reviews online to ensure that they are not a scam and that their offers are valid and being successfully enjoyed by their clients. A timeshare can be an enjoyable purchase if you are investing into a plan that will suit your vacation needs, and have the flexibility that your family desires. Do not feel pressured into making a timeshare purchase based on the gifts that are offered today only. Before investing thousands of dollars in a binding commitment, ensure that you are purchasing a comprehensive vacation package that will offer you the freedom to travel when and where you want.

While I understand some of what is hated about timeshares I own one and enjoy it VERY much. We travel much better than our family who is often in the same area in a small hotel with terrible amenities. While they are unhappy with accommodations we have what amounts to a luxury two bedroom apartment with an excellent gym, several restaurants, a marina and beach and daily activities. Do we pay yearly? yep, but we spend about $600 per year and travel about 45 days a year. To be fair, we are flexible and I’m self-employed and often work while we’re on vacation so we have an advantage, but the rooms we stay in average around $400 per night and I’m able to rent extra time that covers most of my expenses. Am I smarter than most Americans. ABSOLUTELY. That’s not arrogance, but fact. I’ve made what people are complaining about being a financial black hole turn into a way to travel with basically free luxury lodging. So YES, timeshares can be great if you’re smarter than most of the people around you.

I also wonder who has been sold ANYTHING when they were told all of the downsides? When you bought your house did the realtor tell you (without prompting) that the windows are draft? Did they tell you what the taxes would be yearly? Did you buy a car and the salesman told you how much tires would cost when they needed changed? Or even what an oil change runs now? When we buy anything we should assume their are maintenance costs (Maintenance fees are one of the MOST hated things about timeshares). How do owners or potential owners expect the resorts to be kept up and updated?

I’m in the same boat- bought a timeshare a few years ago and definetly want to get rid of it! How did you get rid of yours? I have read lots of forums and blogs that warn you about not buying time shares (moot point as I’m already stuck with one)but there isn’t a lot of information about how to legitmately get rid of one. . . any advice?

For many people, timeshare may not be the best idea, but for me it has been pretty great and most of the people I’ve met in the resorts I’ve stayed in have said the same thing. I have points and not a fixed week so I can’t speak to that, but the accommodations that I get with my points (I paid about $18,000 for mine) far exceed what I could get spending the same kind of money in hotels. The places that I like to go and the quality of hotels I like to stay in runs me upwards of $200/night. I spend 10 to 15 nights per year on vacation and intend to do that as long as I’m able. So my yearly hotel bill is between $2000 and $3000. If I vacation of the next 10 or 15 years, I’ll pay a lot more than that in hotel bills, so, sure, if I were willing to stop vacationing and put that money into investments, I might do much better, but I’m not willing to give up my vacations. Even when I factor in my yearly maintenance, I’m still coming out ahead and the longer I use it, the more financial sense it makes. Even if I have to get rid of this thing for $1 10 years down the line, I’ve still saved money vs. the cost of my hotel rooms. I admit, it’s a bit of a gamble because if something happens that stops me from going, I will loose a lot of money, but barring that, I feel this was a good choice for me. Might not be for others though. Bottom line, it’s not for everyone, but it works pretty well for some. Make sure you plan to vacation for a number of years (and you’re flexible because availability can be an issue), and this might be a great choice for you. But know that if you need to get out of it, you won’t be able to make any money back by selling, no matter what a salesperson tells you. It’s not an investment, it’s a money saver, but you should definitely know what you’re getting into. My parents ended up giving their timeshare away, and even that took a few months to do. It’s kind of like buying a house (except there will be no appreciation). If you need to get out of it, it won’t happen overnight, but as long as you’ve gotten use out of it that is worth more than the money you put in (including maintenance costs), you’ll come out ahead in the end. I’ve owned for about 5 years, btw, and I’m almost done paying off my monthly note.